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Sparks

It’s the Doldrums for Wind Turbine Makers

GE and Siemens are having a tough week.

Siemens banners.
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Two of the biggest companies in the wind turbine industry, General Electric and Siemens Energy, both shared disquieting news about their businesses this week. GE disclosed in its third quarter earnings that its offshore wind business had $1 billion in losses so far this year, while Siemens had to respond to reports it was seeking a bailout from the German government. Both GE and Siemens Energy sell turbines, while the latter also services wind farms.

The news adds up to a bleak picture for the wind industry, especially offshore, where developers are having problems keeping existing projects on budget and their suppliers aren’t making money either.

“Next year, we expect offshore will have similar losses, but substantially improved cash performance,” GE’s chief executive Larry Culp said in a call with analysts on Tuesday.

“Offshore will be difficult. That’s what’s behind those underlying numbers for this year and for next,” Culp said. “We know the industry is ready for a reset … We think we can make a much better business with offshore wind, but we’re staring at some challenges that we need to address here in the fourth quarter and in ‘24 for sure.” The company described both higher costs for turbine production as well slowed down deliveries. It also warned that producing its new, larger turbines “remains a key challenge that could result in future losses.”

Across the Atlantic, Siemens Energy was forced Thursday to respond to reports in the German media that it was looking for government support to back up its ailing wind business. The company said that “In light of recent media reports regarding talks with the German government,” its financial results for 2023 would show that its traditional power plant and transmission business was “expected to continue [its] excellent performance,” while the wind business “is working through the quality issues and is addressing offshore ramp up challenges.”

Siemens Energy said that “for the time-being” the wind business is “not concluding new contracts for certain onshore platforms and is applying strict selectivity in the offshore business,” and that revenue is expected to be lower than expected next year as well, while losses will be higher.

Earlier this year, Siemens Energy said that there had been a “substantial increase in failure rates of wind turbine components,” for its onshore business that would incur losses of €1 billion to address, a number that ballooned to €4.5 billion. It also said it was “experience[ing] ramp up challenges in offshore."

In short, the company has turbines that malfunction and contracts that are not profitable, weighing down the entire business.

Shares in the energy company were down more than a third today in Germany.

Reuters and other publications reported earlier Thursday that the company was in talks with the German government about financial support. The company said in its statement that it was “evaluating various measures to strengthen the balance sheet of Siemens Energy and is in preliminary talks with different stakeholders, including banking partners and the German government, to ensure access to an increasing volume of guarantees necessary to facilitate the anticipated strong growth.” One publication, WirtschaftsWoche, put the figure that Siemens Energy was after at €15 billion.

Siemens Energy spun off from its parent Siemens AG in 2020, combining its gas turbines and transmission business into one, along with a two-thirds stake in Siemens Gamesa, the wind business. Earlier this year, Siemens Energy acquired the rest of the wind business. The company’s total market value has fallen by about two-thirds since its stock market debut.

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Green
Sparks

The Country’s Largest Power Markets Are Getting More Gas

Three companies are joining forces to add at least a gigawatt of new generation by 2029. The question is whether they can actually do it.

Natural gas pipelines.
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Two of the biggest electricity markets in the country — the 13-state PJM Interconnection, which spans the Mid-Atlantic and the Midwest, and ERCOT, which covers nearly all of Texas — want more natural gas. Both are projecting immense increases in electricity demand thanks to data centers and electrification. And both have had bouts of market weirdness and dysfunction, with ERCOT experiencing spiky prices and even blackouts during extreme weather and PJM making enormous payouts largely to gas and coal operators to lock in their “capacity,” i.e. their ability to provide power when most needed.

Now a trio of companies, including the independent power producer NRG, the turbine manufacturer GE Vernova, and a subsidiary of the construction firm Kiewit Corporation, are teaming up with a plan to bring gas-powered plants to PJM and ERCOT, the companies announced today.

The three companies said that the new joint venture “will work to advance four projects totaling over 5 gigawatts” of natural gas combined cycle plants to the two power markets, with over a gigawatt coming by 2029. The companies said that they could eventually build 10 to 15 gigawatts “and expand to other areas across the U.S.”

So far, PJM and Texas’ call for new gas has been more widely heard than answered. The power producer Calpine said last year that it would look into developing more gas in PJM, but actual investment announcements have been scarce, although at least one gas plant scheduled to close has said it would stay open.

So far, across the country, planned new additions to the grid are still overwhelmingly solar and battery storage, according to the Energy Information Administration, whose data shows some 63 gigawatts of planned capacity scheduled to be added this year, with more than half being solar and over 80% being storage.

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Yellow
Sparks

An Emergency Trump-Coded Appeal to Save the Hydrogen Tax Credit

Featuring China, fossil fuels, and data centers.

The Capitol.
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As Republicans in Congress go hunting for ways to slash spending to carry out President Trump’s agenda, more than 100 energy businesses, trade groups, and advocacy organizations sent a letter to key House and Senate leaders on Tuesday requesting that one particular line item be spared: the hydrogen tax credit.

The tax credit “will serve as a catalyst to propel the United States to global energy dominance,” the letter argues, “while advancing American competitiveness in energy technologies that our adversaries are actively pursuing.” The Fuel Cell and Hydrogen Energy Association organized the letter, which features signatures from the American Petroleum Institute, the U.S. Chamber of Commerce, the Clean Energy Buyers Association, and numerous hydrogen, industrial gas, and chemical companies, among many others. Three out of the seven regional clean hydrogen hubs — the Mid-Atlantic, Heartland, and Pacific Northwest hubs — are also listed.

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Red
Sparks

Why Your Car Insurance Bill Is Making Renewables More Expensive

Core inflation is up, meaning that interest rates are unlikely to go down anytime soon.

Wind turbines being built.
Heatmap Illustration/Getty Images

The Fed on Wednesday issued a report showing substantial increases in the price of eggs, used cars, and auto insurance — data that could spell bad news for the renewables economy.

Though some of those factors had already been widely reported on, the overall rise in prices exceeded analysts’ expectations. With overall inflation still elevated — reaching an annual rate of 3%, while “core” inflation, stripping out food and energy, rose to 3.3%, after an unexpectedly sharp 0.4% jump in January alone — any prospect of substantial interest rate cuts from the Federal Reserve has dwindled even further.

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